Questions
Answer the following questions   How can using RFID tags or bar codes on goods or products...

Answer the following questions  

  1. How can using RFID tags or bar codes on goods or products provide significant benefit in the expenditure cycle?
  2. Describe the function of an impress fund.
  3. Explain what CIM means and its benefits.
  4. What is activity-based costing (ABC) and identify two (2) of the benefits of activity-based costing?
  5. What is the difference between a payroll service bureau and a professional employer organization?
  6. Explains the purpose of a general ledger payroll clearing account.
  7. . Explain two benefits of XBRL.   
  8. What is responsibility accounting?

In: Accounting

On Monday morning, Andy and Brian enter an oral, unwritten contract for the sale of five...

On Monday morning, Andy and Brian enter an oral, unwritten contract for the sale of five acres of land in Delray Beach, Florida, at “$10,000 per acre.” On Tuesday morning, Andy demands that Brian pay him “$11,000 per acre” for the land. Brian refuses. Andy sues. Who should win, and why? In your answer, explain written/oral and implied/express contracts.

In: Accounting

You hold a 25 year bond from Telus with a par value of $1,000 and a...

You hold a 25 year bond from Telus with a par value of $1,000 and a coupon rate of $70 (7%) a year. This bond is currently selling for $1,023. (No calculations are needed in this question).

(a). What do you know about the yield of this bond? Explain.

(b). If Telus incurred a large amount of debt what would likely happen to the:

i. coupon rate on your Telus bond - explain

ii. Yield to maturity on your Telus bond - explain

iii. Your Telus bond price - explain

(c). If the Government of Canada suddenly increased interest rates on their bonds what would happen to the:

i. coupon rate on your Telus bond - explain

ii. Yield to maturity on your Telus bond - explain

iii. Your Telus bond price - explain

In: Accounting

Barry Potter and Winnie Weasley are considering making an S election on March 1, 2019, for...

Barry Potter and Winnie Weasley are considering making an S election on March 1, 2019, for their C corporation, Omniocular. However, first they want to consider the implications of the following information:

  • Winnie is a U.S. citizen and resident.
  • Barry is a citizen of the United Kingdom, but a resident of the United States.
  • Barry and Winnie each own 50 percent of the voting power in Omniocular. However, Barry’s stock provides him with a claim on 60 percent of the Omniocular assets in liquidation.
  • Omniocular was formed under Arizona state law, but it plans on eventually conducting some business in Mexico.

a. Is Omniocular eligible to elect S corporation status?

For the remainder of the problem, assume Omniocular made a valid S election effective January 1, 2019. Barry and Winnie each own 50 percent of the voting power and have equal claim on Omniocular’s assets in liquidation. In addition, consider the following information:

  • Omniocular reports on a calendar tax year.
  • Omniocular’s earnings and profits as of December 31, 2018, were $55,000.
  • Omniocular’s 2018 taxable income was $15,000.
  • Omniocular’s assets at the end of 2018 are as follows:

Omniocular Assets

December 31, 2018

Asset

Adjusted Basis

FMV

Cash

$

50,000

$

50,000

Accounts receivable

20,000

20,000

Investments in stocks and bonds

700,000

700,000

Investment in land

90,000

100,000

Inventory (LIFO)

80,000

*

125,000

Equipment

40,000

35,000

Totals

$

980,000

$

1,030,000

*$110,000 under FIFO accounting.

  • On March 31, 2019, Omniocular sold the land for $42,000.
  • In 2019, Omniocular sold all the inventory it had on hand at the beginning of the year. This was the only inventory it sold during the year.

Other Income/Expense Items for 2019

Sales revenue

$

155,000

Salary to owners

(50,000

)

Employee wages

(10,000

)

Depreciation expense

(5,000

)

Miscellaneous expenses

(1,000

)

Interest income

40,000

Qualified dividend income

65,000

  • Assume that if Omniocular were a C corporation for 2019, its taxable income would have been $88,500.
  1. How much LIFO recapture tax (in total) is Omniocular required to pay and when is the first installment due?
  2. How much built-in gains tax, if any, is Omniocular required to pay?
  3. How much excess net passive income tax, if any, is Omniocular required to pay?
  4. Assume Barry's basis in his Omniocular stock was $40,000 on January 1, 2019. What is his stock basis on December 31, 2019?

For the following questions, assume that after electing S corporation status Barry and Winnie had a change of heart and filed an election to terminate Omniocular’s S election, effective August 1, 2020.

  • In 2020, Omniocular reported the following income/expense items:

January 1—July 31, 2020 (213 days)

August 1—December 31, 2020 (153 days)

January 1—December 31, 2020

Sales revenue

$

80,000

$

185,000

$

265,000

Cost of goods sold

(40,000

)

(20,000

)

(60,000

)

Salaries to Barry and Winnie

(60,000

)

(40,000

)

(100,000

)

Depreciation expense

(7,000

)

(2,000

)

(9,000

)

Miscellaneous expenses

(4,000

)

(3,000

)

(7,000

)

Interest income

6,000

5,250

11,250

Overall net income (loss)

$

(25,000

)

$

125,250

$

100,250

  1. For tax purposes, how would you recommend Barry and Winnie allocate income between the short S corporation year and the short C corporation year if they would like to minimize double taxation of Omniocular’s income?
  2. Assume in part (f) that Omniocular allocates income between the short S and C corporation years in a way that minimizes the double taxation of its income. If Barry’s stock basis in his Omniocular stock on January 1, 2020, is $50,000, what is his stock basis on December 31, 2020?
  3. When is the earliest tax year in which Omniocular can be taxed as an S corporation again?

Question:

How much LIFO recapture tax (in total) is Omniocular required to pay and when is the first installment due? As per new tax rule, the corporate tax rate is 21% .

Due Date

Total LIFO recapture tax -----------------?             April 15,2019

--------------------------------------------------------------------------------------------------------------------------------------

e. Assume Barry's basis in his Omniocular stock was $40,000 on January 1, 2019. What is his stock basis on December 31, 2019? (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.)
g. Assume in part (f) that Omniocular allocates income between the short S and C corporation years in a way that minimizes the double taxation of its income. If Barry’s stock basis in his Omniocular stock on January 1, 2020, is $50,000, what is his stock basis on December 31, 2020? (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.)

e.Stock basis   -------------------------?

g. Stock basis ------------------------?

In: Accounting

QUESTION 1. The Interiors Company located in Dominica manufactures executive desks. Selected costs associated with the...

QUESTION 1.

The Interiors Company located in Dominica manufactures executive desks. Selected costs associated with the manufacture of the executive desks and the general operations of the company are given below:

a)    Wood used in the manufacture of the executive desks, at a cost of $500 per desk.

b)    The executive desks are assembled by workers, at a cost of $100 per desk.

c)    Workers assembling the executive desks are supervised by a factory supervisor who is paid $75,000 per year.

d)    Electrical cost of $50 per machine-hour are incurred in the factory in the manufacture of the executive desks (five machine hours are required to produce a desk).

e)    The depreciation cost of the machines used in the manufacture of the executive desks totals $5,000 per year.

f)     The salary of the president of the Company is $250,000 per year.

g)    The Company spends $100,000 per year to advertise its products.

h)    Salespersons are paid a commission of $80 for each desk sold.

Questions:

1. Identify the variable costs in the case above.

2. Identify the Fixed costs in the case above.

3. In your own words, explain the difference between product and period cost.

4. Identify the Period costs in the case above.

5. Identify the Product cost in the case above.

6. In your own words, explain the difference between direct and indirect cost.

7. Identify the direct cost in the case above.

8. Identify the indirect cost in the case above

In: Accounting

You have been asked to prepare a December cash budget for Ashton Company, a distributor of...

You have been asked to prepare a December cash budget for Ashton Company, a distributor of exercise equipment. The following information is available about the company’s operations:

The cash balance on December 1 is $56,600.

Actual sales for October and November and expected sales for December are as follows:

October November December
Cash sales $ 71,200 $ 73,400 $ 86,200
Sales on account $ 440,000 $ 576,000 $ 639,000

Sales on account are collected over a three-month period as follows: 20% collected in the month of sale, 60% collected in the month following sale, and 18% collected in the second month following sale. The remaining 2% is uncollectible.

Purchases of inventory will total $315,000 for December. Thirty percent of a month’s inventory purchases are paid during the month of purchase. The accounts payable remaining from November’s inventory purchases total $181,500, all of which will be paid in December.

Selling and administrative expenses are budgeted at $522,000 for December. Of this amount, $74,100 is for depreciation.

A new web server for the Marketing Department costing $103,500 will be purchased for cash during December, and dividends totaling $10,000 will be paid during the month.

The company maintains a minimum cash balance of $20,000. An open line of credit is available from the company’s bank to increase its cash balance as needed.

Required:

1. Calculate the expected cash collections for December.

2. Calculate the expected cash disbursements for merchandise purchases for December.

3. Prepare a cash budget for December. Indicate in the financing section any borrowing that will be needed during the month. Assume that any interest will not be paid until the following month.

In: Accounting

12. Diamond Boot Factory normally sells their specialty boots for $28 a pair. An offer to...

12. Diamond Boot Factory normally sells their specialty boots for $28 a pair. An offer to buy 50 boots for $22 per pair was made by an organization hosting a national event in Norfolk. The variable cost per boot is $10 and special stitching will add another $3 per pair to the cost. Determine the differential income or loss per pair of boots from selling to the organization. Enter the amount as a positive number.

Differential________ per pair of boots from accepting the special order is $ .

13. An unfinished desk is produced for $36.05 and sold for $65.75. A finished desk can be sold for $75.00. The additional processing cost to complete the finished desk is $6.45.

Provide a differential analysis for further processing. Round your answers to two decimal places, if necessary.

Differential revenue from further processing:
Revenue per unfinished desk $
Revenue per finished desk
Differential revenue $
Differential cost per desk:
Additional cost for producing
Differential   from further processing $

14. Magpie Corporation uses the total cost concept of product pricing. Below is the cost information for the production and sale of 55,600 units of its sole product. Magpie desires a profit equal to a 19% rate of return on invested assets of $615,000.

Fixed factory overhead cost $39,300
Fixed selling and administrative costs 8,000
Variable direct materials cost per unit 5.23
Variable direct labor cost per unit 1.88
Variable factory overhead cost per unit 1.13
Variable selling and administrative cost per unit 4.50

The cost per unit for the production and sale of the company's product is

a.$12.74

b.$13.59

c.$1.98

d.$0.85

15. Hayden Company is considering the acquisition of a machine that costs $305,000. The machine is expected to have a useful life of 6 years, a negligible residual value, an annual net cash flow of $92,000, and annual operating income of $78,200. What is the estimated cash payback period for the machine (round to one decimal points)?

a.5.1 years

b.1.2 years

c.3.9 years

d.3.3 years

In: Accounting

On August 1, Teal, Inc. exchanged productive assets with Flint, Inc. Teal’s asset is referred to...

On August 1, Teal, Inc. exchanged productive assets with Flint, Inc. Teal’s asset is referred to below as “Asset A,” and Flint’ is referred to as “Asset B.” The following facts pertain to these assets. Asset A Asset B Original cost $105,600 $121,000 Accumulated depreciation (to date of exchange) 44,000 51,700 Fair value at date of exchange 66,000 82,500 Cash paid by Teal, Inc. 16,500 Cash received by Flint, Inc. 16,500 Assuming that the exchange of Assets A and B has commercial substance, record the exchange for both Teal, Inc. and Flint, Inc. in accordance with generally accepted accounting principles.

Account Titles and Explanation

Debit

Credit

Teal, Inc.’s Books

1.

2.

3.

4.

5.

Flint, Inc.’s Books

1.

2.

3.

4.

5.

Assuming that the exchange of Assets A and B lacks commercial substance, record the exchange for both Teal, Inc. and Flint, Inc. in accordance with generally accepted accounting principles.

Account Titles and Explanation

Debit

Credit

Teal, Inc.’s Books

1.

2.

3.

4.

Flint, Inc.’s Books

1.

2.

3.

4.

5.

In: Accounting

The FASB's objectives for financial reporting in SFAC are similar in some ways to the Trueblood...

The FASB's objectives for financial reporting in SFAC are similar in some ways to the Trueblood Report but differ in numerous respects. What are the major differences in the two documents? Does the FASB's attempt provide a more reasonable general framework given the politicized environment in which the FASB must operate? How does Chapter 1 of the joint conceptual framework differ from these documents and what does it say about financial reporting standard setting going forward? (SFAC 8, which includes Chapter 1).

In: Accounting

Question: During FY 2016, Alpha Company sold 500 units for total sales of $20,000. Manufacturing costs...

Question: During FY 2016, Alpha Company sold 500 units for total sales of $20,000. Manufacturing costs consisted of direct labor $2,500, direct materials $5,400, variable factory overhead $1,100, and fixed factory overhead $3,500. Alpha Company does not maintain any inventories. Selling expenses were $900 variable and $1,000 fixed. Administrative expenses were $1,500 variable and $2,000 fixed. Net Income was $3,100. Use this information to determine the following using CVP Analysis: (Round all final answers to nearest dollar or whole unit number.)

1. Breakeven Point in total sales dollars

2. Breakeven Point in total units

3. Breakeven Point in total sales dollars if the fixed factory overhead increased by $1,500

4. Breakeven Point in total units if the fixed factory overhead increased by $1,500

5. Net Income if sales units increased by 35%

In: Accounting

In its published SEC 10-K Balance Sheet for the FY 2015, Alpha Company, had the following...

In its published SEC 10-K Balance Sheet for the FY 2015, Alpha Company, had the following balances (all balances are normal):

Accounts

Amount

Preferred Stock, ($100 par value, 5% noncumulative, 50,000 shares authorized, 8,000 shares issued and outstanding)

$800,000

Common Stock ($10 par value, 200,000 shares authorized, 120,000 shares issued and outstanding)

$1,200,000

Paid-in Capital in Excess of par, Common

150,000

Retained Earnings

700,000

The following are related events that occurred during 2016:

January 2, Alpha declared a 10% stock dividend on its common stock when Alpha's common stock was trading for $15 per share on that day. Stock dividends were distributed on January 31 to shareholders as of January 25.

February 29, Alpha reacquired 1,000 shares of common stock for $22 each.

March 31, Alpha reissued 350 shares of treasury stock for $25 each

July 1, Alpha reissued 400 shares of treasury stock for $19 each.

October 1, Alpha declared full year cash dividends for preferred stock and $1.50 cash dividends for outstanding shares and paid shareholders on October 15.

December 1, issued 10,000 shares of common stock for equipment with a sticker price of $210,000. Alpha's common stock was trading at $20 per share that day.

Net Income for 2016 was $250,000

Use this information to prepare General Journal entries, without explanations, for the 2016 noted transactions.

In: Accounting

respond to the following in a minimum of 175 words: This week focuses on criteria for...

respond to the following in a minimum of 175 words:

This week focuses on criteria for calculating capital changes and consolidated financial statements.

Discuss the criteria for calculating capital changes. How do you calculate change in working capital from balance sheet?

In: Accounting

P4.1B:   Karlin Company Information for 2020. Retained earnings , January 1, 2020 2,250,000 Sales revenue 53,000,000...

P4.1B:   Karlin Company Information for 2020.

Retained earnings , January 1, 2020 2,250,000

Sales revenue 53,000,000

Cost of goods sold   33,000,000

Interest revenue 120,000

Selling and administrative expenses 8,900,000

Write-off of goodwill 2,100,000

Income taxes for 2020 3,650,000

Loss on the sale of investments 53,000

Loss due to hurricane damage 1,100,000

Gain on the disposition of the retail division (net of tax) 23,000

Loss on operations of the retail division (net of tax) 231,000

Dividends declared on common stock 350,000

Dividends declared on preferred stock 125,000

INSTRUCTIONS:1. Prepare a multiple-step income statement 2. Prepare a separate Retained Earnings StatementOn September 15, Karlin sold the retail operations to Shark CorpAssume that 60,000 shares of common stock are outstanding.

In: Accounting

Backwoods American, Inc., produces expensive water-repellent, down-lined parkas. The co. implemented a TQM program in 2005....

Backwoods American, Inc., produces expensive water-repellent, down-lined parkas. The co. implemented a TQM program in 2005. Following are the quality-related accounting data that have been accumulated for the 5-year period after the program's start.

Year
2006 2007 2008 2009 2010
Quality Costs ($1000s)
Prevention 3.2 10.7 28.3 42.6 50
Appraisal 26.3 29.2 30.6 24.1 19.6
Internal Failure 39.1 51.3 48.4 35.9 32.1
External Failure 118.6 110.5 105.2 91.3 65.2
TQC 187.2 201.7 212.5 193.9 166.9
Accounting Measures ($1000s)
Sales 2700.62 2690.12 705.22 310.22 880.7
Manufacturing Cost 420.9 423.4 424.7 436.1 435.5
Total Failure Cost Ratio 84.24% 80.22% 72.28% 65.60% 58.30%
Year
2006 2007 2008 2009 2010
Prevention Cost Ratio 1.71% 5.30% 13.32% 21.97% 29.96%
Appraisal Cost Ratio 14.05% 14.48% 14.40% 12.43% 11.74%
Year
2006 2007 2008 2009 2010
Quality Sales Indices 0.069 0.075 0.301 0.625 0.190
Quality Cost Indices 0.445 0.476 0.500 0.445 0.383
  • List some examples of each quality-related costs - i.e., of prevention, appraisal, and internal and external failure costs - that might result from the production of the parkas.
  • The BA Inc produces 20,000 parkas annually. The quality management program implemented improved average percentage of good parkas produced by 2% each year beginning with 83% good quality parkas in 2005. Only 20% of poor quality parkas can be reworked (and made good). Compute the product yield for each of the 5 years.
  • Assuming a rework cost of $12/parka, determine the manufacturing cost per good parka for each of the 5 years. What do these results imply about the co's quality management program?

In: Accounting

Biotech Limited Financial year end 30 June 2020 You are an auditor in Smit & Chandra,...

Biotech Limited

Financial year end 30 June 2020

You are an auditor in Smit & Chandra, a mid-tier audit firm. Your firm is the incumbent auditor on Biotech Ltd, a pharmaceutical company. Since the previous audit, the company has listed on the Australian Securities Exchange which means the company has to meet additional reporting regulations. Due to rapid growth, Biotech Ltd is financially stretched and its accounting systems are struggling to cope with the growth in the business. You recently read an article in the Australian Financial Review, which stated that Biotech Ltd is currently under investigation by the Australian Taxation Office (ATO) for alleged failure to pay the appropriate amount of Pay As You Go (PAYG) tax on their payroll.

Biotech Ltd is a pharmaceutical company, developing drugs to be licensed for use around the world. Products include medicines such as tablets, medical gels and creams. The market is very competitive, encouraging rapid product innovation. New products are continually in development and improvements are made to existing formulations. Drugs must meet very stringent regulatory requirements prior to being licensed for production and sale. You are aware that during the 2020 financial year, Biotech Ltd lost several customer contracts to overseas competitors.

Biotech Ltd approached its bank during the year to extend its borrowing facilities. An extension of $20 million was sought to its existing loan to support the on-going development of new drugs. The long-term borrowings are subject to debt covenants in which the company must maintain a current ratio of 3.5:1.

In addition, the company asked the bank to make cash of $5 million available if an existing court case against the company is successful. The court case is being brought by an individual who suffered severe side effects when participating in a clinical trial in 2016.

On 8 June 2020, the Company announced to the market it had been the victim of a cyber-security incident that resulted in supplier and customer details being disclosed on the dark web. The Company is assessing the costs of the incident and the subsequent reduction in revenue. The Company expects this to have a material impact on future earnings.

In December 2019, the internal audit department of Biotech Ltd performed a review of the operation of controls over processing of overtime payments in the Payroll department. It was found that the company’s specified internal control procedures in relation to the processing of overtime payments were not followed.

Below are some results of the analytical review procedures performed by the Senior Auditor (David) during the planning stage:

Sales                                                                                                            12.5% decrease since prior year

Net profit after tax                                                                                20% decrease since prior year

Accounts payable                                                                                   15% decrease since prior year

Cash at Bank                                                                                             16% increase since prior year

Accounts receivable                                                                              18% increase since prior year

Inventories                                                                                               6%   increase since prior year

Current ratio:                                                                                            3.6:1

Debt to Equity ratio:                                                                               0.6

Minutes from the Audit Planning meeting with Simon Jones (Finance Director of Biotech Ltd) held on 30th April 2020:

Due to the current government restrictions, the planning meeting with Simon Jones was held via Zoom. In attendance at the meeting was the Audit Partner (Michael), the Audit Manager (Amanda) and the Audit Senior (David).

The following key items were discussed during the meeting:

  • Mr Jones raised concerns about the conduct of the previous audit, stating numerous examples of when he and his staff had been interrupted when they were busy. He stated that he wanted guarantees that this year's audit will be more efficient, less intrusive and cheaper, otherwise he will seek an alternative auditor in future.
  • Michael reminded Mr Jones that fees relating to the audit engagement from the previous year were still outstanding.
  • Both Michael and Mr Jones also discussed the range of non-audit services provided to Biotech Ltd, which includes payroll preparation, tax computation and advice.
  • Mr Jones gave the audit team an update on the court case pertaining to the individual who suffered severe side effects from a company trial (refer above). According to legal advice provided to Mr Jones by the company’s legal counsel, it is more likely than not that Biotech will lose the court case, which would result in a significant amount of cash having to be paid as a settlement.
  • Amanda asked Mr Jones if he considered the decline in profitability as an indicator of a material uncertainty surrounding the going concern assumption. Mr Jones responded by saying, “Look, everything might seem dire, but we have it under control. We will be here this time next year, so keep that in mind”. Michael then looked at Amanda and David and said, “Make sure that you mention the conversation that we have just had with Mr Jones about the appropriateness of the going concern assumption in the audit working papers. This should be sufficient enough audit evidence for us.”
  • Mr Jones also mentioned the following: “As you know, Biotech Ltd has a Goodwill asset on the balance sheet. This is an indefinite useful life intangible asset. In accordance with the Accounting Standards (AASB 138), we are required to test the asset for impairment every year. We usually prepare a Value in Use calculation based on discounted future cash flows that we expect to generate in the next five years. I have completed this year’s calculation by rolling forward the prior year’s calculation and have just updated the dates. There was no need to update the future cash flow figures.”

The Audit Team

The audit team consists of 4 people. The partner is Michael. He has been the audit partner on the Biotech Ltd audit for 6 years. The audit manager is Amanda. This is Amanda’s first time on the Biotech Ltd audit. David is the audit senior and is responsible for the initial audit planning. David has recently completed the Graduate Diploma of Chartered Accounting. David has just been offered a well-paying accountant position at Biotech but he has not yet decided whether to accept the position. The graduate on the audit is Audrey. Audrey’s friend is the receptionist at Biotech Ltd. The receptionist has no accounting knowledge and has no involvement with the recording or processing of accounting transactions.

Accounts Receivable / Sales Accounting Cycle and Internal Control System

At the end of each month, the sales manager determines the amount of products required to meet sales demand for the following month based on sales orders received. He reviews the sales orders received from customers and then prepares the pre-numbered inventory requisition forms, which he then sends to the warehouse managers so that they can prepare the goods for delivery. One copy of the sales order and inventory requisition form is sent to the warehouse, one copy is sent to the accounts receivable department and one copy is filed in the sales department.

The warehouse prepares the goods for delivery to the customers and generates the delivery document. When the goods have been delivered, the signed delivery document, which includes the delivery details, is forwarded to the accounts receivable department. The other copy is filed in the warehouse. The accounts receivable clerk matches the signed delivery document with the sales order and inventory requisition form. Once satisfied that all of the details agree, the clerk generates the sales invoice. Once generated, the clerk does another check to ensure that all details per the sales invoice agrees to the delivery document and sales order. Once satisfied, she writes “checked” on the sales invoice and sends it to the customer. At the end of every week, a different clerk in the Accounts Receivable team reviews the bank statements for receipt of payments from customers and performs a reconciliation against the sales invoices. Once a customer has paid the sales invoice, the clerk stamps “received” on the sales invoice and files that along with all the other documents in date order.

The walk-through of the accounts receivable/sales cycle confirmed that the accounting and internal control system was working as documented above.

Test of control:

As part of the audit, Audrey tested the controls over the accounts receivable system. She selected a sample of twenty sales transactions and tested the control that all details had been checked. Out of the 20 sales transactions that were selected for testing, 5 sales invoices in the sample did not have the word “checked” written on them. When documenting the results of the test performed, Audrey concluded that the internal control did not operate effectively and consistently throughout the year but that no further audit work is required.

Substantive test

In order to test the occurrence of the sales transactions, Audrey selected a sample of sales invoices and traced them to the General Ledger to test that they were properly recorded.

Subsequent events not previously mentioned

  • One of Biotech Ltd’s major customers went into liquidation in July 2020. The balance due from the customer at 30 June 2020 was $564,000. This is a material amount. There has been no provision/allowance for doubtful debts raised for this debtor in the financial statements for the year ended 30 June 2020. Biotech Ltd’s legal adviser stated in a telephone call that that the probability of any funds being received from the debtor is remote.

  • On 2 July 2020, Biotech Ltd declared a one-for-five rights issue of 100,000 shares at $2.20. These shares were payable in full on 31 July 2020.

What is the independence of the audit team?

In: Accounting